ERP Systems Store Vast Quantities of Information About the Materials

question 16

Multiple Choice

ERP systems store vast quantities of information about the materials, machines and equipment, labor, power, maintenance, and setups needed to manufacture different products. This helps simplify the budgeting process as ERP systems ________.

• A) can quickly calculate the manufacturing and nonmanufacturing costs based on a given sales quantity
• B) automatically identify and record changes in processes involved in producing products
• C) identify which underlying assumptions are likely to change
• D) always use a rolling budget ensuring that a budget is always available for a specified future period

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Definitions:

Valuation

The process of determining the present value of an asset or a company based on earnings, assets, and market comparisons.

Required Return

The minimum expected yield by investors to justify the risk of the investment.

Independent Projects

Investment projects whose cash flows are not affected by the accept or reject decision for any other project, allowing for independent evaluation.

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments through calculating the rate of return where the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.